Unity insurance facility expanded to cover all shipping to and from Ukrainian ports

Rhea-AI Summary

Marsh McLennan (NYSE: MMC) partners with Ukrainian government and Lloyd’s to expand Unity insurance facility, offering affordable war risk insurance for non-military cargo, supporting Ukraine's export trade. Unity now covers iron ore, steel, and other key industries, providing hull and P&I war risk insurance at reduced premiums. Standby letters of credit from state-owned Ukrainian banks and insurers at Lloyd’s provide up to US$50 million coverage. The partnership aims to boost Ukraine's economy and global trade.

Insights

Financial Analyst

The expansion of the Unity insurance facility to cover a wider range of goods beyond grain, including key Ukrainian exports such as iron ore and steel, represents a strategic move to support Ukraine's economy and trade. By providing lower war risk premiums through public-private collaboration, there is a potential to increase the attractiveness of Ukrainian exports by reducing the cost burden on exporters. This cost reduction may result in improved profit margins and could stimulate foreign investment, given the reduced risk associated with shipping goods from a conflict zone.

For stakeholders, particularly investors in the commodities and shipping sectors, this initiative could signal a positive shift. Reduced insurance costs might lead to an uptick in export volumes, which in turn could support global supply chains and stabilize prices in the commodities market. However, the actual impact on trade volumes will depend on the perceived effectiveness and uptake of the insurance offering.

Risk Management Expert

From a risk management perspective, the Unity facility's expansion to include war risk insurance at reduced premiums is a significant development in mitigating the risks associated with maritime export in conflict zones. The provision of up to US$50 million in hull and P&I war risk insurance underwritten by Lloyd's insurers serves as a risk transfer mechanism that could reassure shipowners and charterers, potentially leading to more shipping activity and business continuity for Ukraine's export sectors.

However, the long-term sustainability of such a facility will be contingent on the evolving geopolitical situation and the claims experience. If the conflict escalates or claims exceed projections, insurers may need to adjust premiums or coverage limits, which could affect future trade dynamics.

Economic Policy Analyst

The Ukrainian government's involvement in the Unity insurance facility highlights the use of economic policy tools to bolster national industries amid the challenges posed by the ongoing conflict. By focusing on non-raw material exports and strengthening the processing industry, the government aims to diversify its economy and reduce dependency on raw materials, which is crucial for economic resilience.

For the global economy, the facilitation of Ukrainian exports could help alleviate some of the supply chain pressures that have been exacerbated by the conflict, particularly in the steel and agricultural sectors. However, the effectiveness of these measures in achieving the intended economic diversification will depend on the country's ability to navigate the complexities of war and maintain stable trade relations.

Public-private partnership with Ukrainian government, Marsh McLennan, and Lloyd’s to support Ukraine export trade by providing lower war risk premiums

LONDON--(BUSINESS WIRE)-- Marsh McLennan (NYSE: MMC), the world’s leading professional services firm in the areas of risk, strategy and people, together with the Ukrainian government and Lloyd’s, today announced a major expansion of its Unity insurance facility. Unity now provides affordable war risk insurance for ships carrying all non-military cargo – such as iron ore, steel, and containerised shipping – and underpins Ukraine’s wider maritime export ecosystem.

Launched in November 2023 to provide affordable war risk insurance for grain shipments and other critical food supplies globally, Unity offers hull and separate protection & indemnity (P&I) war risk insurance at significantly reduced premiums compared to standard market pricing. In addition to grain, Unity now provides cover for Ukraine’s other leading export industries including iron ore, steel, electrical equipment, and animal fodder.

Standby letters of credit created by the state-owned Ukrainian banks Ukreximbank and Ukrgasbank, each confirmed by DZ Bank, will continue to provide a first loss compensation fund to shipowners and charterers which is supported by the Government of Ukraine.

Underwritten by insurers based at Lloyd’s and other London-based insurers, and led by Ascot, Unity provides up to US$50 million in hull and P&I war risk insurance. Unity is available to clients of all Lloyd’s registered brokers, to provide added support to ongoing humanitarian efforts and alleviate continued pressure on supply chains and global food security.

John Doyle, President and Chief Executive Officer, Marsh McLennan, commented: “Marsh McLennan is dedicated in our support of Ukraine – helping it attract global investment to rebuild the country, and recover from the devastating impact of war on its people and economy. We’re pleased to expand this public-private partnership with the Ukrainian government. It will provide exporters with lower premiums to ship a wider range of goods through its Black Sea trade routes and deliver major economic benefits to Ukraine.”

Yulia Svyrydenko, First Deputy Prime Minister of Ukraine and Minister of Economy, said: “Expanding insurance to cover ships carrying all non-military cargo is extremely important for Ukraine, especially in terms of exporting metallurgical products, as the full-scale invasion has heavily affected this sector. In 2023, compared to 2021, steel production decreased by 3.4 times, and exports of metallurgical products decreased several times.

"Insuring vessels backs our efforts to increase the volume of all non-raw material product exports, in particular iron ore and steel. Strengthening the processing industry and developing non-raw material exports are priorities for the government to enhance our country’s economic resilience.”

John Neal, Lloyd’s CEO, added: “Since the invasion of Ukraine, Lloyd’s has partnered with the United Nations, governments, regulators and insurers to keep economies and supply chains moving in spite of difficult circumstances. New partnerships between the public and private sector, including the expansion of the Marsh Unity facility, are the hallmark of the Lloyd’s market, bringing insurance experts and policymakers together to solve complex risks.”

Ascot said: “Ascot are delighted to be supporting Marsh and Ukraine with the enhanced scope of the facility.”

About Marsh McLennan

Marsh McLennan (NYSE: MMC) is the world’s leading professional services firm in the areas of risk, strategy and people. The Company’s more than 85,000 colleagues advise clients in 130 countries. With annual revenue of over $23 billion, Marsh McLennan helps clients navigate an increasingly dynamic and complex environment through four market-leading businesses. Marsh provides data-driven risk advisory services and insurance solutions to commercial and consumer clients. Guy Carpenter develops advanced risk, reinsurance and capital strategies that help clients grow profitably and pursue emerging opportunities. Mercer delivers advice and technology-driven solutions that help organizations redefine the world of work, reshape retirement and investment outcomes, and unlock health and wellbeing for a changing workforce. Oliver Wyman serves as a critical strategic, economic and brand advisor to private sector and governmental clients. For more information, visit marshmclennan.com, or follow us on LinkedIn and X.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240301099610/en/

Eileen Mercer

+44 (0)7990 802 830

eileen.mercer@marsh.com

Source: Marsh McLennan

FAQ

What is the ticker symbol for Marsh McLennan?

The ticker symbol for Marsh McLennan is MMC.

What does the partnership between Marsh McLennan, Ukrainian government, and Lloyd’s aim to achieve?

The partnership aims to expand Unity insurance facility, offering affordable war risk insurance for non-military cargo, supporting Ukraine's export trade.

What industries are now covered under Unity's war risk insurance?

Unity now covers industries like iron ore, steel, electrical equipment, and animal fodder, providing hull and P&I war risk insurance at reduced premiums.

How much coverage does Unity provide for hull and P&I war risk insurance?

Unity provides up to US$50 million in hull and P&I war risk insurance.

Which organizations provide standby letters of credit for shipowners and charterers?

State-owned Ukrainian banks Ukreximbank and Ukrgasbank, confirmed by DZ Bank, provide standby letters of credit for shipowners and charterers.